Bridging loans are flexible short-term loans that can be used for a number of purposes. One advantage they have over many other forms of loans is that they can be arranged quickly.
The initial decision
The first step is to talk to Ascot Mortgages to discuss your situation. How much do you need to borrow? What assets are available for security? How long do you want the loan for? How will you pay and when will you pay the loan back? The answer to these and other questions provide detailed knowledge about you and the reasons why you need bridging finance.
At Ascot Mortgages, we will match your loan requirements to a suitable specialist lender. Our experts will discuss your situation with lenders and you should hear back within an hour about whether you have been accepted for a loan. It could take a little longer, but should not be more than 24 hours.
The offer will be subject to various conditions concerning your financial status, the valuation of the asset used as security and your ability to repay the loan. If you accept this initial offer you will be sent a loan pack that will set out what documentation is needed to support your loan application. This will include proof of identity and proof of income. If the loan application is from a business, then audited accounts will need to be provided.
The lender will require an exit strategy, which is a plan for when and how you intend to repay the loan.
Sending documents and checking
As soon as you have sent in the relevant documents, the lender can check them fairly quickly. All information and documents provided need to be accurate otherwise delays could occur if you need to send further documents. Ascot Mortgages can help you prepare your documents.
If there is a delay, Ascot Mortgages can liaise with the lender to speed up the process.
Valuation
Most bridging loans will require the property used as security to be valued. The amount that you can borrow will be a percentage of the property’s worth. This is known as the loan-to-value rate or LTV. Typical loan to value rates are 65% to 70%.
The lender cannot rely on your estimation of how much the property is worth. A valuer is appointed to write a valuation report, which assesses the condition of the property and the values of similar houses in the area to arrive at a valuation amount.
A valuer usually visits the property, but if a recent survey has been done then the valuer may accept this without needing to visit the property. If the valuer does not have to visit the property, the valuation process can be done quicker, otherwise, it is dependent on when the valuer can schedule a visit to the property.
Legal work
There are legal processes involved in securing a bridging loan. While you can use your own solicitor to do this, if speed is important, then it is better to employ a specialist bridging loan solicitor. They will understand the need for speed and complete the legal processes quickly. Some solicitors will have a team of people concentrating on your legal work so that it can be completed as soon as possible.
The time frame
In theory, it is possible to obtain bridging loan funds in five days or even less after the initial loan application. However, this is unusual.
The decision to lend you money should not take more than 24 hours, but will often be less. Allow two weeks for the formal loan offer after your documents have been checked and another two to four weeks for valuation and legal process to be completed.
From the first discussion with Ascot Mortgages about your loan to the funds being available can be about four to six weeks if the process goes smoothly. More complex cases can take a little longer.
If time is important or your loan is for a very time sensitive purpose, talk to Ascot Mortgages who can discuss with the lender ways in which the process can be speeded up. There are many small specialist lenders, who unlike major banks, have a very flexible approach to lending. They are prepared to look at each individual case, rather than stick to a rigid time table.
A bridging loan can normally be arranged quicker than a standard or commercial mortgage. This is why bridging loans are often used as a source of short-term finance to quickly complete property purchases while waiting for a long-term mortgage funds. A speedy bridging finance process can be done within seven days.
There should not be a significant difference in the time taken for a bridging loan between an individual borrower and a business borrower.
Funds may be deposited with your solicitor or transferred to your bank for immediate use. Interest is charged at a monthly rate, so the sooner the loan can be repaid the less interest you will pay. There are no penalties for early repayments.
Property auctions
If you purchase a property at an auction, you will initially have to put down a 10% deposit then pay the other 90% within 28 days. If you apply for a standard mortgage for the property, funds may not be available at the end of the 28-day period. There are lenders that specialise in property auction finance. They will make sure that funds from a bridging loan will be available to meet the 28-day deadline. As soon as the standard mortgage is available, you can repay the bridging loan.
Talk to Ascot
At Ascot Mortgages, we are experts in bridging finance and search through a wide choice of lenders to match the borrower’s individual needs.
If time is not critical, then allow the application process a few weeks to complete. If you are in a hurry, we will do everything we can to help you receive your loan funds as quickly as possible. Talk to us today.
